US Bancorp Is First Company to Lose Suit Over Stale Pension Data

U.S. Bancorp can’t escape a proposed class action by former workers who say the company shortchanged their pensions when they applied for early retirement.

The retirees can move forward with claims that their early retirement pensions were not “actuarially equivalent” to traditional pensions as required by the Employee Retirement Income Security Act, Judge Paul A. Magnuson of the U.S. District Court for the District of Minnesota held. The retirees say their pensions were calculated using out-of-date interest rates and life expectancy data, which caused their benefits to be lower.

Magnuson’s June 27 ruling is the first substantive decision in the recent wave of cases targeting how large employers calculate pensions for early retirees. At least seven other employers are facing similar allegations, including American Airlines, PepsiCo Inc., MetLife, and Anheuser-Busch. Raytheon Co. was hit with a similar suit on the same day Magnuson issued his opinion.

U.S. Bancorp accused the retirees of trying to impose a “reasonableness” requirement into ERISA’s pension calculation rules, but Magnuson wasn’t persuaded. The retirees aren’t seeking reasonableness but actuarial equivalence, which is required by statute, Magnuson said.

U.S. Bancorp is represented by Morgan Lewis & Bockius LLP and Stinson LLP. The retirees are represented by Gustafson Gluek PLLC and Izard Kindall & Raabe LLP, the latter of which is leading the litigation charge over outdated pension data.

The case is Smith v. U.S. Bancorp, D. Minn., No. 0:18-cv-03405-PAM-KMM, 6/27/19.